What's your net worth?

3 July 2009

http://img9.imageshack.us/img9/4033/personalfinancemainfull.jpgGauging your net worth can be a useful exercise to look at your economic well-being, or just to pummel your sense of self worth right into the ground. But looking at your assets (what you own) and subtracting what you owe (your debts & liabilities) is the financial version of a heart monitor, keeping track of your economic 'vitals' and well-being, which is why money experts recommend keeping track of your figures.

But what about comparing and measuring your net worth against others? There may be some attraction in that, but with people of the same age, income and occupations having very different financial situations, it could easily raise more questions than it answers.

Nevertheless, some of us still want to know how we fare compared to others, so here's how:

1. Indulge your inner financial voyeur: You can really let the money voyeur in you run wild by going to NetworthIQ, a site where people post their actual net worth (or what they say their net worth is) as well as other information about themselves. These posts are then organized by categories such as income, education and occupation. And no, it is not a dating site.

2. Dig deeper to find more specific stats: The Fed report above shows net worth only in aggregate. For a more detailed look, you've got to go to another report, the Survey of Consumer Finances. It, too is a dense tome full of statistics. If you go to Table 4 on page 11, you'll find net worth figures broken down by age, income, race, education, occupation and other variables. It's important to note that this survey is done only once every three years, with the most recent being 2007. So as you peruse the figures, remember that they were compiled before the current downturn.

3. Use comparison calculators: If you want to compare two salaries in terms of annual or monthly net take home pay, you can do so with Contractor Calculator's comparison calculator. This gives a general idea of what the averages are for your age group and income. For a general idea of what the averages are for your median, you can try CNN's net worth comparison calculator.

4. Check out the prevailing trends: Go to this site from the Institute for Fiscal Studies, fill in a quiz (no identifying information required), and find out where you fit in in the financial scheme of things. Alot of net worth data seems to be more prevalent in the US, such as the Federal Reserve's quarterly "Flow of Funds" report, the latest of which was released on June 11. But for the scholastic, be prepared. It's 124 pages of densely packed stats, with no nice diverting pictures to help you get through. But if you go to Table B.100 on page 102, you'll see household net worth stats from 2002 up to the first quarter of this year, perhaps useful for those who want to compare their net worth with our American counterparts!

(If you don't want to wade through the report, here's a spoiler: It's not pretty. As a result of the recession and market crash, total household net worth in the U.S. was down to the equivalent of £30.6 trillion at the end of the first quarter, a 20% drop from its level at the end of 2007.)

5. Assess your own financial strengths and weaknesses: A long as you're going to the trouble to calculate your net worth, why not see how your finances shape up in more specific areas as well? CNN, while mostly American, has a Financial health tool, Asset Allocator and Debt Reduction Planner to give yourself a financial check-up.

Oh, and if you want to work up a head of steam about net worth and the cost of living, go read this BBC article about how your pay stacks up against that of an MP. Good stuff. Who knows? If you take the time to sit down and crunch some numbers, you could end up with a higher net worth by the end of the year. Or you could crawl into a corner and rock back and forth until the unpleasantness abates.

Do you think net worth matters? Do you think it's just silly to keep up with the joneses and there is no point to compare how much you have with others? Let's hear your thoughts in the comments below!


  • sirspunkalot
    Don't forget that the human body is worth about £4 when broken down into essential mineral content!
  • Lumoruk
    So I would only need to kill around 250,000 people to make about a million squid?
  • Jimbomahoney
    Whilst I think it can be useful to measure one's net worth (it can also be a fun game for those so inclined), a more important measure is the percentage of that net worth in appreciating assets. I'm sure you get my drift, but someone with a net worth of £100,000, of which only £10,000 is in the bank/stocks/bonds/whatever and £90,000 in cars, jewellery etc. is considerably worse off than someone with the reverse situation. Ultimately, I suppose the real measure would be how happy someone is. If the person with 90% of their net worth in cars etc. is happy, then good on them! (Of course, being happy *now* is one thing, but what about being happy *later* when the money runs out?)

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